The new Japan-Australia Economic Partnership Agreement (FTA)

There has been a flurry of media attention paid to Australia-Japan relations this week. For example, I was asked to appear on “The Wire” radio on 7 April, on the eve of the conclusion of 7 years of negotiating this major bilateral Free Trade Agreement (transcript here). At that stage, the inclusion of Investor-State Dispute Resolution (ISDS) protections for foreign investment in the treaty was still a real possibility, but I argued that there was no need to panic. Japanese investors have never experienced major problems with Australian government authorities illegally interfering with their investments, and indeed have never directly invoked ISDS (especially arbitration) procedures already provided by Japan’s treaties with around 30 countries.
Both governments subsequently announced key features of the Japan-Australia FTA, which ultimately did not include ISDS – unlike the Korea-Australia FTA concluded in December 2013 (and formally signed this week in Seoul). On this blog and then the East Asia Forum, I argued that this presumably meant that the Australian negotiators were happy enough with market access commitments offered by Japan, especially for agricultural products. This may be true but it is hard to be sure, and he argued that omitting even a weak form of ISDS in the FTA with Japan may complicate Australia’s ongoing regional and bilateral FTA negotiations (including with India and Indonesia).

More broadly, as reported in The New Daily on 9 April, I recorded my hope that consumers and their organizations will press automobile and other retailers to pass on all or most of the price reductions that should follow from the tariff reductions agreed in the new FTA. Overall, I commented to the Sydney Morning Herald that the FTA looks like a very good deal for Australia, but that “the devil is in the details” – and the text has not yet been made public.
On 2 April, I also provided a Submission (No 21) to the Senate inquiry into the Trade and Foreign Investment (Protecting the Public Interest) Bill 2014, proposed by a Greens Party senator from Tasmania to preclude the Australian government from ever including ISDS in future treaties. The Submission attaches my article in a special issue of the Asian Studies Review (2013), which also argues that a more nuanced approach is needed to improve the treaty-based investment arbitration system.
Over 2014-2016 I am examining questions related to foreign investment and ISDS particularly in the Asia-Pacific region, for a cross-institutional and inter-disciplinary Discovery Project funded by the Australian Research Council. These topics will also be raised at the 12th conference of the Australian Network for Japanese Law (ANJeL), which I am co-organising with JCU A/Prof Justin Dabner for 16 May in Cairns, with the theme of “Japanese Law and Business amidst Bilateral and Regional Free Trade Agreements”.

Author: Luke Nottage

Prof Luke Nottage (BCA, LLB, PhD VUW, LLM LLD Kyoto) is founding co-director of the Australian Network for Japanese Law (ANJeL), Associate Director (Japan) of the Centre for Asian and Pacific Law at the University of Sydney (CAPLUS), and Professor of Comparative and Transnational Business Law at Sydney Law School. He specialises in international dispute resolution, foreign investment law, contract and consumer (product safety) law.